Launceston (Australia): In 2023, the price of Iron ore has increased dramatically, as a result of China's reopening its economy after abandoning its stringent zero-COVID policy. Although other commodities like crude oil and copper have also benefited from the perception of recovering China, the rise in Iron ore prices appears to be specifically fuelled by a rise in demand. In 2022, Iron ore had one of the worst performances among all commodities. Prices fell because of worries about the state of the Chinese macroeconomy and disruptions from COVID-19. A trillion-dollar economy that has suffered considerably over the previous few years has been given fresh life by China's decision to lift strict COVID-19 restrictions in the later days of December and the first few weeks of January 2023.

Iron ore and steel demand in China is anticipated to increase this year, according to the vice chairwoman of the China Iron and Steel Association (CISA), who spoke earlier this month. Additionally, she stated that the demand is anticipated to increase in 2023 as a result of ongoing improvements to Covid-19 prevention and control methods and the impact of efforts to stabilise the economy. This was stated during the industry summit in Beijing.  CISA estimates that China produced 1 billion tonnes of crude steel in 2018, a 2.3% decrease from 2021.

Regulators have expressed concern and issued warnings in response to iron ore's abrupt price changes. This month, the National Development and Reform Commission stated that it will constantly watch the situation and expressed its extreme concern regarding recent pricing adjustments. Beijing's pro-growth economic stance is anticipated to continue to bolster iron ore prices in the future. Our estimate for iron ore for 2023 has been raised due to confidence about China's reopening. With a seasonal pause anticipated over the Chinese New Year holidays later this month, when steel output typically slows down, China’s domestic market is still cautious for the first quarter and now anticipate prices to float around $110/t in 1Q 2023. It is also predicted by market expert that prices will surge by more than $120/t in the third quarter, which is normally construction season in China.